Over the past two weeks, two CEOs — completely independent from one another — told me exactly the same thing.
Different sectors. Different companies. Yet the conclusion was identical.
EBITDA is a lagging indicator.
Customer satisfaction and employee engagement are far more interesting.
Not because EBITDA doesn’t matter. Quite the opposite. But because EBITDA always comes too late. It tells what has happened, not what is about to happen.
One of them explained it very clearly. When the finance team reports EBITDA, they are reporting on the past. That number is the consequence of decisions, behaviours and trade-offs that were made long before. What matters from a leadership perspective is something else: what, today, gives a meaningful indication of what the next EBITDA will look like?
For both leaders, the answer was the same. If the goal is to understand the future, lagging indicators like EBITDA are insufficient. The focus needs to shift to leading indicators. And in their view, the most important ones are customer satisfaction and employee engagement.
That perspective brought to mind a remark I had heard a few months earlier from yet another business leader:
“If I have a strong EBITDA, I know I must have had satisfied customers.
If I measure high customer satisfaction today, I know my future EBITDA will be strong.”
At its core, this expresses exactly the same logic. But it also raises a legitimate question. Is this a genuine management insight — or merely a well-rehearsed cliché?
In classic management and business literature, the distinction is straightforward.
Lagging indicators are outcome measures. They capture the results of past decisions and behaviours. Financial metrics such as revenue, profit and EBITDA fall squarely into this category. They are indispensable as a scoreboard: they show whether the business works economically.
Leading indicators, by contrast, sit closer to causes and behaviours. They tend to move earlier than financial results and therefore act as early signals. Customer satisfaction, customer retention, product usage, employee engagement, attrition risk — these metrics often change before financial performance does.
From that perspective, the two CEOs are right. Anyone who relies solely on EBITDA to assess how a company is doing is always looking with a delay.
The academic and business literature is nuanced, but consistent on one point. A substantial body of research shows that customer satisfaction correlates with retention, repeat purchasing, willingness to pay and positive word-of-mouth. At company level, this often translates into stronger financial performance over time.
But “often” is not “always”.
The strength of that relationship varies significantly depending on context: industry dynamics, competitive pressure, switching costs, contract duration, pricing power, and even the way satisfaction is measured. A high NPS in a low-switching-cost market means something very different from the same score in a long-term contractual environment. Timing matters too: the financial impact of satisfaction rarely appears immediately.
In other words, customer satisfaction can be a powerful leading indicator — but only when it is properly contextualised and understood. Measurement alone is not enough; interpretation matters.
This is where nuance becomes essential. It would be too simplistic to dismiss EBITDA as “just the past”.
Yes, EBITDA is reported after the fact and therefore reflects previous decisions. But it is also a condensed indicator of a company’s current health. It contains information about pricing, cost structure, productivity, churn, upsell and operational discipline.
In that sense, EBITDA does not only describe where a company was. It also says a great deal about how it is functioning right now.
So the real distinction is not between important and unimportant metrics, but between their roles.
• EBITDA is the scoreboard.
• Leading indicators are the steering wheel.
If a company steers exclusively on EBITDA, it steers too late.
If it focuses only on leading indicators and ignores financial reality, it risks self-deception.
Sound performance management does not pit leading and lagging indicators against each other. It deliberately combines them.
Leading indicators make it possible to adjust before problems become visible in the financials. They provide direction, signal risk and make cause-and-effect relationships tangible. Lagging indicators enforce discipline and realism. They confirm whether steering decisions actually translate into economic value.
The question, therefore, is not whether EBITDA matters.
The question is whether EBITDA is the right instrument to understand the future.
Leaders who want to understand whether an organisation is truly on track need to look beyond financial reporting alone. Customer satisfaction and employee engagement are powerful signals precisely because they reflect behaviour, culture and everyday reality.
At the same time, these indicators must never be interpreted in isolation. Not every satisfied customer automatically generates profit. Not every engaged team can compensate for structural market issues. Leading indicators require context, discipline and an understanding of time lags.
Perhaps that is the shared insight behind what these CEOs independently expressed: not that EBITDA is irrelevant, but that it arrives too late to guide direction.
EBITDA tells how the game ended.
Leading indicators show how the game is being played.
And organisations that care about long-term performance pay attention to both.
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